We have continued our studies of chromatin structure in the neighborhood of expressed genes. The globin gene family in chicken erythroid cells serves as a model system in which it is possible to study the mechanisms associated with regulation of the cluster and individual members of the family during erythroid development. We have extended our studies of the function of the 1.2 kb insulator DNA sequence at the 5' end of the chicken beta-globin locus, which is capable of blocking enhancer-promoter interaction when it lies between them. In earlier work we showed that a 250 bp 'core' fragment within this sequence carries a large part of the enhancer blocking activity. We have now shown that a 40 bp fragment from within the core is itself very active. We have found that components of nuclear extracts bind to this fragment, and that the ability to bind is correlated with enhancer blocking activity. This has allowed us to identify the central DNA sequence necessary for activity, and to purify partially the protein that binds there. We have also investigated the ability of the full 1.2 kb insulator element to confer protection against position effects in reporters stably transformed into cells. We find that the insulator protects against variability of expression from one line to another, and also prevents the slow extinction of expression over time seen in the absence of selective pressure. Protection against extinction is associated with specific protection against histone deacetylation in the chromatin associated with the gene. In other studies we have shown that 5' of the globin domain boundary there is a 16 kb condensed chromatin domain, beyond which we have found a new gene for an erythroid-specific folate receptor. The gene is likely to be important for erythroid cell proliferation early in development. Its pattern of expression is different from that of the nearby globin genes, suggesting that the insulator and compact chromatin may act as a barrier against cross-interaction of the genes, a testable hypothesis.